ISLAMABAD, March 7: The government has asked the International Chamber for the Settlement of Investment Disputes (ICSID) not to register the request of arbitration filed by Italian company Impregilo, which was given contract by Wapda for the Ghazi Barotha project.

The contractor of the hydroelectric power project has approached the chamber, which works under the umbrella of World Bank, demanding $450 million from the government.

The government in its preliminary objections before the chamber at Washington, stated that under Article 25(1) of the ICSID Convention, the jurisdiction of the centre did not extend to the Water and Power Development Authority. Wapda was not a “constituent subdivision or agency of Pakistan and has not been designated to ICSID by Pakistan,” it said.

It is the third application for arbitration before the ICSID by a foreign company engaged for a project here. The accumulated claim is over $1 billion.

The ICSID has so far registered the application only of Swiss company SGS. When a complaint is registered, both the parties are required to deposit $100,000 as fee, apart from engaging foreign lawyers specializing in ICSID proceedings.

If a suit is decreed ex parte by the ICSID, the other party can ask for the execution of the treaty by identifying Pakistan’s foreign assets.

Impregilo relies on the bilateral investment treaty between Pakistan and Italy and its contract with Wapda for the Ghazi Barotha Hydropower Project.

The contractor claimed that Wapda was in serious breach of its contractual commitments and was responsible for denial of justice to Impregilo by frustrating the contractual dispute resolution mechanism.

Attorney-General Makhdoom Ali Khan and Finance Minister’s Adviser Dr Tariq Hassan have filed objections against the registration of the request.

The government has taken the position that Impregilo had no authority to represent the joint venture, the Ghazi Barotha Contractors, with whom the afgreement was executed.

The government pointed out that the request submitted by the company did not contain full and accurate information, the documentation filed with the request was not in order and it did not prove the identity of necessary and proper parties.

Experts are of the view that the ICSID is very liberal in registering such requests and it generally leaves it to the tribunal to decide such issues.

If the request is registered, the government and Impregilo will each appoint an arbitrator. Neither party can appoint its national as arbitrator. The arbitrators will by mutual agreement appoint a chairman. If they fail to agree, the chairman will be nominated by the ICSID.

The arbitration is likely to cost the government millions of dollars. Had the bilateral treaty been carefully negotiated by the industries and foreign affairs ministries, the costs could have been avoided, officials said.